Lessons Learned Following an Institutional Reorganization

AAMC Group on Business Affairs - Webinar

November 16, 2018

Geisel School of Medicine at

Dartmouth

Agenda

1

Background (20 Minutes)1

Lessons Learned & Questions (10 Minutes)4

Vision & Implementation (10 Minutes)2

Tools Utilized (10 Minutes)3

DMS Net Operating Surplus/(Deficit) Before

Transfers

2

Business as usual not an option – downward spiral

DMS transformed 20x20 creates sustainable future with ongoing

excellence

-$30,000

-$20,000

-$10,000

$0

$10,000

$20,000

Business As Usual DMS 20 x 20 DMS Actuals

DMS 20x20: WHERE IT WILL TAKE US(slides from circa 2011)

2

$ in thousands

Research

prioritization

plan

4 add’l

mega grants

4 add’l mega grants;

15 add’l faculty

Improve

infrastructure &

address baseline

4 new “mega”

grants; 30 add’l

faculty

$136.7 $114.6 $119.6 $120.6

$12.6 $15.0 $13.6

$31.3 $32.5 $4.8

$19.2 $23.1

$0

$50

$100

$150

$200

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Grant Spending & Indirect Cost Recovery (in millions)

Base as of 7-31-2011 Improve the Base Recruitment Mega-Grants

Model predicts research funding will exceed $180M in 2020

Proposed

Williamson

TRB opens

3

Phase I Phase 2 Phase 3

34 new

faculty

20x20 Research Investment Return Projections(slides from circa 2011)

3

The Trajectory Revisited(November 2014)

$4,719

$(9,835)

$(20,694)

$(17,021)

$(40,495)

$(45,000)

$(40,000)

$(35,000)

$(30,000)

$(25,000)

$(20,000)

$(15,000)

$(10,000)

$(5,000)

$-

$5,000

$10,000

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Long Range Projection (Nov 2014)

($’s in 000’s)

1

4

Projection

The “20x20 Plan” was launched in 2011 with Trustee and College endorsement; highlights include adding 75 new faculty and construction of a new research building, expectation of new philanthropic support

• Construction on new building began in 2014, completion in 2016. Philanthropy support for

Basic Science Departments*:

» Anatomy

» Biochemistry

» Genetics

» Microbiology & Immunology

» Pharmacology & Toxicology

» Physiology & Neurobiology

» Epidemiology

» Biomedical Data Science

5

Clinical Science Departments:

» Anesthesiology

» Community & Family Medicine

» Medicine

» Neurology

» Ob/Gyn

» Orthopedics

» Pathology

» Pediatrics

» Psychiatry

» Radiology

» Surgery

Geisel Academic Organization (2014)

As one of three professional schools at Dartmouth College, Geisel, in affiliation with

two primary clinical partners1, consisted of 23 departments and centers in 2014

Interdepartmental Centers:

» iQBS (Quantitative Biological Sciences)

» Norris Cotton Cancer Center

» Synergy (CTSA)

» The Dartmouth Institute for Health Policy and Clinical Practice (TDI)

» Geisel/Dartmouth provides all academic appointments (regardless of paymaster). Tenure only provided to Dartmouth College-employed faculty.

» D-H, through the Dartmouth-Hitchcock Clinic (D-HC) was/is the primary employer of the clinical faculty/professional staff and the primary clinical home for Geisel’s clinical departments, with the exception of the Department of Psychiatry (which was a Dartmouth-based department).

» Geisel provided support for nearly all sponsored research programs (basic and clinical), including federally-funded clinical trials (industry clinical trials ran through D-H).

» In the years leading up to 2014, D-H provided a modest level of inter-entity support (~$6M/year, negotiated annually)…not a “Dean’s tax”… equivalent to roughly 0.4% of total D-H net patient service revenues.

* Geisel’s department structure originated and emulated the content of

the pre-clinical medical education curriculum (e.g. Biochemistry faculty

taught biochemistry courses)

1Dartmouth-Hitchcock (D-H) and the White River Junction VAMC (VA)

Core Mission View (2014)Challenges Identified

6

( $'s in 000's)

MD

Program

Graduate

Programs TDI Research

Clinical

and Lab

Services

Other Inst.

Activity

Advance-

ment

Plant

Overhead

Education

Admin.

Dept

Admin.

General

Overhead Other Grand TotalTuition & Fees 18,908$ 4,983$ 4,311$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 28,202$

Sponsored Research - - 25,422 102,879 7,980 333 - - - - - - 136,614

Clinic & Hospital Support - - 963 - - - - - - - - 6,500 7,463

Endowment & Gift Income 4,835 135 1,037 3,848 463 198 1,782 - 243 84 - 13,080 25,705

Other Revenue 199 221 7,988 14,432 16,369 3,939 2,564 294 - 7,760 1,705 - 55,472

Total Revenues 23,941 5,339 39,722 121,159 24,812 4,470 4,346 294 243 7,844 1,705 19,580 253,456

Compensation Related Expense 4,990 1,039 17,573 62,755 21,741 5,337 3,500 778 1,015 12,401 6,644 - 137,772

Non-Compensation Expenses 10,011 4,517 21,160 54,292 3,480 2,190 1,482 1,601 262 6,950 9,887 - 115,831

Total Expenses 15,000 5,555 38,732 117,047 25,220 7,528 4,983 2,379 1,277 19,351 16,530 - 253,603

Contribution Margin 8,941 (216) 989 4,112 (408) (3,057) (637) (2,085) (1,034) (11,507) (14,825) 19,580 (147)

Allocated Plant & Overhead (3,710) (743) (2,523) (34,690) (2,843) (1,472) (344) 2,085 1,034 11,507 14,825 - (16,874)

Estimated Total Margin 5,231 (960) (1,534) (30,578) (3,251) (4,529) (980) 0 0 0 0 19,580 (17,021)

Total Margin Percentage 22% -18% -4% -25% -13% -101% -23% 0% -7%

With mounting losses, a new financial reporting tool was implemented to aid in

understanding performance across the school’s “core missions”

» 2014 reflected significant investments (deficits) in Research, Clinical Services and Other Institutional Activity

» Research investment includes support for clinical research enterprise

» Undergraduate Medical Education (UME) tuition and unrestricted revenues from endowment / D-H operating support (Other column) not sufficient to sustain the current level of activity at Geisel

Clinical (Department) Academics

» A separate view generated for clinical academics (only) reflected a $17M total investment: $10M for clinical research, $4M loss on

clinical practice (Psychiatry) activities, and $4M in support of medical education teaching costs

» Net of D-H inter-entity payment, loss of $11M on clinical academics. No increase in inter-entity payment was available to Geisel.

Other Research

» Basic research and interdisciplinary research at Geisel required an additional $20M investment

» ~20% of the active investigators (60 of 289) generated 70% of total sponsored funding

» ~15% of the active investigators (~40) generated sufficient facilities and administrative cost recoveries to support their research

programs

» The lower 2/3rd’s of the actively support researchers (189) averaged less than $50K in modified total direct costs (MTDC) and

Space (in 2014)

8Prior to building the WTRB, Geisel already owned / leased more research space

than was supported by benchmarks (~60,000 NASF)

In 2014 the space available to support research was a combination of owned and

leased space spread across two campuses in Hanover and Lebanon, NH (3 miles apart)

New

Building

~80,000

Owned

~140,000

NASF

Leased

~130,000

NASF

Research Space

Available Space Needed

Needed

Excess Space

» Several benchmarks for wet, hybrid

and dry-lab programs were utilized

to assess the need vs. the

availability of space

» Discounting to account for older

buildings, the size of the research

portfolio required ~210,000 NASF or

47% of the current footprint.

» Majority of leased space supported

office-based research programs.

40%

60%

Agenda

9

Background (20 Minutes)1

Lessons Learned & Questions (10 Minutes)4

Vision & Implementation (10 Minutes)2

Tools Utilized (10 Minutes)3

The Vision (Fall 2014)

Three faculty committees convened (Fall 2014):

› Core Mission – provide recommendations to the Dean on current and future investments in academic missions of Geisel; help prioritize and assess value of existing/new programs

› Fiscal Policy – work with the Dean’s office, Faculty Council and Dean’s Academic Board to implement and strengthen fiscal policies

› Space/Use – work with the Dean’s office to program the new WTRB building, assess and provide input on other (programmatic) use of space

» Other Committees (2014 – Present)

› Geisel Monthly – Joint meeting with Dartmouth College leadership (e.g. Provost, SVP Admin &

Finance, President’s Office, VP Research); provide oversight and implementation support

› Dartmouth College Trustees – Regular meetings with Academic Affairs & Finance Committees

› D-H Academic Council – Organized between Dean/D-H Chief Academic Officer (CAO)

› D-H – Geisel – Joint leadership meeting (Dean, CAO, CFO & Exec. Dean for Administration); focus

on support for clinical academic enterprise

› Sub-Committees (HR, Legal, Sponsored Research, Faculty Affairs, Controller’s Office) – with Geisel,

College, and D-H functional area leaders organized to assess and support implementation

10

“Create a smaller, more nimble and focused medical school (model) that addresses

the immediate financial challenges facing Geisel and which provides a more

supportive environment/experience for Geisel’s students, faculty and staff”

1

2

3

The Plan (Fall 2015)

» Partner with Dartmouth-Hitchcock to migrate responsibility for clinical academic enterprise to D-H:

› Change of employer for >300 faculty and staff

› Migration of clinical enterprise for the Department of Psychiatry

› Migration of clinical research programs (all departments) to D-H

» Rationalization of support for basic and interdisciplinary research at Geisel (DC-based)

› Reduction in numbers of non-tenured faculty

› Retirement/transition agreements moving select tenured faculty off payroll

› Examined multiple models that:

› Provided critical mass in research revenues/unit

› Better reflected areas of foundational research relevant to the missions of the medical school

› Reorganization and standardization of support/positions for department administration

» Reduce Geisel’s physical footprint and the associated costs supported by Dartmouth College

› Exit or sublease commercially-leased space

› Use benchmark data and F&A cost finding to maximize utilization and cost recovery for owned space

11

“Create a smaller, more nimble and focused medical school (model) that addresses

the immediate financial challenges facing Geisel and which provides a more

supportive environment/ experience for Geisel’s students, faculty and staff”

1

2

3

Implementation (2016 - Present)

» Coalesce/sunset existing basic science departments – strong challenge to a “4 center” model› Loss of faculty identity…”Professor of WHAT”?

› Existing faculty in all departments felt unduly penalized

› Lack of clarity in terms of who/how with respect to UME teaching roles

» Departmental reorganization revisited:› Sunset 4 existing departments (Anatomy, Genetics, Pharm Tox and Phys-Neuro)

› Create 2 new departments of (1) Medical Education, and (2) Molecular & Systems Biology

» Moved forward with migration of the clinical academic enterprise to D-H, largely as planned› ~300 employees terminated 6/30/16, hired at D-H on 7/1/16

› Worker Adjustment & Retraining Notification (WARN) Act: 60-day notices

› Severance pay, pay in lieu of notice, grant funded employees

› Tenured faculty (4), clinical faculty considerations

› Eligibility for retirement from Dartmouth College, vesting considerations

› Grantee “status” / transition delayed until January 2019 (2+ years)

› Provision of $20M in transition “relief” support provided to D-H across 2017-2018

» Moved forward on space consolidation/rationalization › Vacated ~80,000 NASF of leased space and a full floor (22,000 NASF) of bench space

› Sold ½ a floor in WTRB to Thayer School of Engineering

› Negotiated payment “in lieu of” rent for D-H occupation of Geisel (DC) “owned” space

› In addition, D-H assumed occupancy costs for 50,000 NASF of space previously supported by Geisel (DC)

12

13

Changes in Faculty Distribution with

Reorganization

Fall 2014 Fall 2017 Change

Total academic personnel: 2,450 Total academic personnel: 2,329 (121)

Ladder faculty: 1,028 Ladder faculty: 962 (66)

Foundational Science Departments

Total 119 Total 120 1

Dartmouth College-employed 102 Dartmouth College-employed 120 18

Other employers 17 Other employers - (17)

Clinical Departments

Total 908 Total 842 (66)

Dartmouth College-employed 180 Dartmouth College-employed 38 (142)

Other employers 728 Other employers 804 76

Revised Projection(February 2018)

14

Since the reorganization in 2016, Geisel’s financial performance and projected

deficits have largely aligned with the anticipated results

$(40,495)

$(12,289)

$(10,524)

$(50,000)

$(40,000)

$(30,000)

$(20,000)

$(10,000)

$-

FY14Actual

FY15Actual

FY16 Actual FY17Actual

FY18Actual

FY19Projected

FY20Projected

FY21Projected

FY22Projected

FY23Projected

Opera

ting D

eficit

2014 Business-as-Usual Projection 2016 Projection 2018 Projection

Agenda

15

Background (20 Minutes)1

Lessons Learned & Questions (10 Minutes)4

Vision & Implementation (10 Minutes)2

Tools Utilized (10 Minutes)3

Tools: PI Productivity

16

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

0 50 100 150 200 250

MTDC and F&A (2014 $'s)Plotted in Descending Order by PI

MTDC (2014 $'s by PI) Indirect Recoveries

2,012,949

602,854

397,719 305,703

198,900

47,591

743,291

267,713 179,186

154,618 66,577

16,992 -

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1-20 21-40 41-60 61-80 81-100 100+

PI-Cohort MTDC/IDC2014 Sponsored Expenditures

MTDC IDC

Cohort Tools (graphs and detailed reports)

• Used to evaluate robustness of research portfolios at School and principal investigator (PI) level

• Cross-walked sponsored MTDC and F&A funding by PI with the assigned research space (NASF) and the actual cost of

space to determine how well (or not) PI’s were using space, and if their programs supported the underlying space costs

• Compared to 2009 data to see how Geisel’s portfolio had evolved over time

• Used comparative funding, utilization and coverage data to highlight faculty/research programs not meeting expectations

Tools: Salary Coverage

17

Faculty Salary Coverage Reporting:

• Dean’s Office meets and reviews quarterly with chairs of all faculty on Dartmouth’s payroll to review salary coverage,

expectations for extramural support, and to agree upon and develop plans for faculty not meeting expectations.

• Tool identifies the percentage of their salary that each faculty member is expected to cover from qualifying sources; tracks

actual percentage over time.

• Definition of qualifying source: in most cases defined as extramural funding sources that bring in new revenues to Geisel

(includes teaching at other schools at Dartmouth).

• New (typically junior) faculty afforded grace period as outlined in offer letters.

• Faculty initially evaluated faculty on a rolling three-year average; later changed to one-year.

• Revised Geisel Academic Appointments, Titles and Promotions (APT) document (faculty handbook) that incorporated these

expectations (and included many others), what happens when a faculty member is in “shortfall”, and criteria by which the

faculty member may return to “good standing”. This continues to be a “living document”—important to include flexibility in

getting approval (Dean’s Academic Board and Faculty Council).

Tools: Space Utilization

18

Prim. 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 MTDC IDC

Loc. Active NASF MTDC MTDC MTDC MTDC/SF MTDC/SF MTDC/SF IDC IDC IDC IDC/SF IDC/SF IDC/SF CAGR CAGR

Professor 46 CTR Y 2,019 1,234,827 1,885,873 2,054,752 612 934 1,018 778,737 1,201,869 1,365,370 386 595 676 29.0% 32.4%

Professor 46 CTR Y 608 435,384 317,125 310,286 716 521 510 298,460 200,805 189,398 491 330 311 -15.6% -20.3%

Professor (Research) 46 CTR Y - 15,429 55,027 43,470 - - - 9,566 34,117 24,362 - - - 67.8% 59.6%

Associate Professor 46 CTR Y 551 427,341 443,509 33,378 776 805 61 264,951 287,791 7,742 481 523 14 -72.1% -82.9%

Assistant Professor (Research) 46 CTR Y 360 294,286 161,426 250,528 818 449 697 174,241 100,084 155,327 484 278 432 -7.7% -5.6%

Instructor Y - - 149,471 143,600 - - - - 91,975 88,012 - - - -3.9% -4.3%

- - - - - - - - - - - - -

Training Grants - 284,845 309,309 275,694 22,768 24,638 22,056 -1.6% -1.6%

Sub-Total: Assigned Faculty Space 3,538 2,692,112 3,321,741 3,111,707 761 939 880 1,548,724 1,941,278 1,852,266 438 549 524 7.5% 9.4%

Dept-Shared Research Support - - - - - - -

Dept-Shared Lab - - - - - - - - - - - - -

Sub-Total: Other Research Support - - - - - - - - - - - - -

Sub-Total: Dedicated Research Space 3,538 2,692,112 3,321,741 3,111,707 761 939 880 1,548,724 1,941,278 1,852,266 438 549 524 7.5% 9.4%

Dept-Administration WTRB/46CTR 282 - - - - - - - - - - - -

Dept-Conference Room WTRB/46CTR 1,082 - - - - - - - - - - - -

Dept-Shared Other WTRB/46CTR 548 - - - - - - - - - - - -

Sub-Total: Other Dept Space 1,913 - - - - - - - - - - - -

Total Assigned Space 5,451 2,692,112$ 3,321,741$ 3,111,707$ 494$ 609$ 571$ 1,548,724$ 1,941,278$ 1,852,266$ 284$ 356$ 340$ 7.5% 9.4%

Faculty Salary Coverage Reporting (annual):

• Modified total direct costs / Net assignable square feet (MTDC/NASF)

• Calculated at PI and department level; PI calculation includes dedicated lab space and research offices

• Department calculation separates dedicated research space, support and admin space

• Benchmarks we use: $300/NASF for Bench; $600/NASF for Office; 15% increment departmental administrative space

• Known issues: Attribution on multi-project grants & multi-PI awards, team science, post-FRO & emeritus faculty

n.b. - We do not micro-manage space allocated to individual departments, or take action based

individual PI density – hold the Department and Chair to benchmarks, rely on them to police

space issues

A More Supportive Environment: (By the Numbers)

19

Within the parameters set by the Trustees and since the reorganization, Geisel has made significant investments aimed at supporting and strengthening our research and education missions:

Total new investment

since 20161.

$44.6MFacilities Projects:

• $17.5M in capital projects

• 8 Projects

New Faculty Recruits:

• $24.2M in start-up funds and

new salary lines

• 11 New recruits (landed)

• 27 Additional slots committed

since July 2016

Investments in Existing Faculty:

• $0.6M in equity adjustments

• $2.2M increase in hard money

salary support

• 42 Faculty members

1 Includes funds committed and/or spent over the time period of FY17-FY22. Does not include any future contemplated faculty recruits or capital projects.

A More Supportive Environment

20

• Significant re-investment in UME program

• Increased UME teaching support for faculty

• Increased UME program staffing support, including new dean and

support staff positions

• Renovations for UME student support services and

classroom/instructional facilities

• Upgrade and expansion of student learning facilities (all educational

programs)

• Professionalization of grants administration function

• Increased “hard money” support for faculty

• Enhanced ability for creating faculty discretionary reserves (FRIA)

• Staff compensation

• In progress – Faculty Research Incentive Program (FRIP)

Agenda

21

Background (20 Minutes)1

Lessons Learned & Questions (10 Minutes)4

Vision & Implementation (10 Minutes)2

Tools Utilized (10 Minutes)3

Lessons Learned

» This was really hard, and still is!

» Make sure your policies are accurate and up to date before any actions undertaken

» Support by Dartmouth College and D-H leadership, inclusive of the Trustees, was…and continues to be…essential

» External advisors very helpful with the initial “vision”

» Support from Dartmouth College and D-H administrative offices (HR, Legal, Sponsored Research, Procurement, Communications, Controller’s Office, etc.) was critical to success

» Document everything – what did we do, what didn’t we do, and why

» Be willing to adapt as implementation unfolds

› The models

› Leaders change

» Expect legal challenges, do appropriate risk assessment

» Continue regular assessments of performance with academic leadership

» On-going need to continue to manage expectations› Classic “loss theory” – people focus on what has been lost, not on the gains

22